don't make a deal, we are going to substantially raise those tariffs. alix: president trump threatens more tariffs on china if no deal is reached, and on any other country who mistreats the u.s. hong kong shuts down. schools closed, meetings fallled, banks like hsbc as protests rage. crawlys demand slows to a after 2025 and stays bullish on u.s. shale production. we speak to a skeptic, scotch field of pioneer natural skeptic, scott sheffield of pioneer natural resources. welcome to "bloomberg daybreak." if you haven't left your house, it is really, really cold. in the market, a little selloff here. down 0.4%. now what? is this a reversal, a rush into havens, or are we just taking a pause? treasury yields, as well as bonds in europe and bonds here,

down by about six basis points. time now for global exchange, where we bring you today's market moving news from all around the world, from hong kong to taipei, from london to new york and washington. our bloomberg voices are on the ground with today's top stories. in hong kong, a third straight day of protests this rep to traffic across the city and shut down public schools for the first time. chinese state media warned of consequences if the violence continues. going to me on the phone from hong kong is karen leigh. give us a sense of what is happening there. karen: i feel like i say this every time i talk to you now, but there is a bit of a new dimension here today. schools were suspended for the first time during these protests. they will not be in session tomorrow. some universities canceling classes for the month or even the semester. people start to realize that maybe this violence is going to go on longer than just these few days. we saw carrie lam say yesterday

she wasn't going to back down on protesters' demands, that violence wasn't the answer, and yet people came out and disrupted the morning commute for a third day in a row. crowds in the central financial district for a third afternoon in a row. these are showing no signs of slowing down, and in a couple of hours, people have called for demonstrations across the city, really in every area we can think of. we will be watching to see whether this escalates or whether the erie, -- whether the eerie feeling is going to give way. alix: thank you very much. we want to stay in asia. tencent out with earnings this morning that missed the lowest analyst estimates after a weakto break it down more with tim culpan from taipei. walk us through the latest numbers out of tencent. both the top line and the bottom line, there was weakness in tencent.

revenue is up a little over 20%, which is not bad, but in china, that is actually pretty weak. the real weakness, as you pointed out, was in advertising. but the upside, smartphone gains posted 25% growth. last year there was a crackdown on games in china. but they've been able to open the spigot a little and get more games out there into market, and monetize those games. one of the games that came out of the end of the quarter was a very patriotic game that has really done well in the charts. ll byey've done we basically appealing to chinese patriotism. they've had higher costs for r&d and more content, so that is what is happening at tencent. alix: really appreciate it. now we want to head to europe. the international energy agency is out with its annual outlook, and the iea sees disparities in the global energy system, and is

protecting the boyle demand to hit a plateau around 2030. take the governments much stronger, clean, efficient technologies, and push much stronger, we may see the peak hit earlier. but at the same time, if the policies of the government's going the other direction, we may see peak comes later. alix: 20 me from london is annmarie hordern. what was your biggest take away from this report out of the iea? this is yet another gloomy outlook for oil demand, similar to the aramco perspective out of the weekend. another key thing for me in this report, they talked about china and how chinese consumption really starts grinding to a halt in the 20 30's. i think what is interesting is the timing of all this. the big things that this might

cast a shadow over, first, the aramco ipo. it is quite a sensitive time for the kingdom. we have the book building process, going out and pitching to investors to buy into the state owned oil giant when you see that we could possibly see a plateau in 2030. that is not going to bode so well. of course, the next few weeks, we have the opec meeting. this report shows that opec and its friends like russia, their market share is really starting to diminish. so the big question, do they want to continue to cut profitson and pump up -- and pump up prices? somenk it sets up interesting backdrop to what we have, the aramco ipo in the opec meeting. alix: thank you very much. here in new york, the highly anticipated speech from

president trump at the economic club didn't include too much that was new, but the president did warn that the u.s. will substantially raise tariffs if trade talks failed to produce a deal. 15%. trump: it's going to very soon, and i tell this to larry, i tell it to everybody, if we don't make a deal, we are going to substantially raise those tariffs. they are going to be raised very substantially, and that's going to be true for other countries that mistreat us, too, because we've been mistreated by 70 countries. joining beat -- by so many countries. alix: joining me now is peggy collins. what was your take away? peggy: investors were looking for more specifics on trade. we didn't get them, so that means there are specific items within the phase one trade deal that are still being worked out. certainly, trump is leaving open the door if they don't get a deal to bring on more tariffs. on the economic front, the

president ran through a list of achievements almost as a reelection pitch, and terms of why people should thinkhim in t. today we have jerome powell of the fed taking the stage in washington before the joint economic committee. we will see what the fed thinks about the economy. we are expecting him to say the economy continues to be in a good place, and signal that the fed is on hold for now. alix: peggy collins, thank you very much. we are going to stay with bloomberg for our coverage of fed chair jay powell's testimony before congress. finally, we want to end in washington, where the house intelligence committee will hold the first public hearings in the impeachment probe into president trump. joining me from the white house is kevin cirilli. what can we expect today? walk us through the key players. kevin: the white house is preparing for political battle as the impeachment inquiry moves into its public phase. ill taylor, former ukraine ambassador for the united states, will testify before the

house intelligence committee. he is a career foreign service diplomat. he is someone, according to sources close to him, who is a political, having served republican and democrat administrations since 1985. then we will hear from another state department official who will testify publicly, as well. democrats are hoping they will be able to symbol phi the message, that they will be able to lay out their case to the american people and to republicans in moderate districts and moderate states that president trump engaged with his personal attorney, rudy giuliani, the former new york city mayor, in a quid pro quo, refusing to offer aid to ukraine unless u.k. president -- unless ukraine president zelensky looked into political dirt on the biden campaign. the topline view is whether or not republicans at this hearing and in the senate change their tune.

if they start to be critical of the president, or they start to .e critical of the testimony that would pose risks to the president come but as of now, i don't see that political calculus happening. alix: president trump has been talking up his green credentials. that happened yesterday at the economic club of new york, where he was discussing climate change. pres. trump: climate change is a very comp >> issue. i consider myself to be -- a very complex issue. i consider myself to be an environmentalist, and many ways. i know the game better than anybody. alix: the iea says it is going to take a lot more than environmentalists. this is one of the charts that came out in that report area of the top blue line here is basically where you are going to see you missions stay if you have current -- you ce missions emissions stay

if you have the current administration policy. efficiency is going to play a big part of that, but also renewables like wind, like solar. you still have nuclear in the mix, and carbonsomething that oe working very hard on. it was a grim outlook for carbon emissions and how we have to combat it in the iea report that also called for that peak oil demand. coming up, abn amro profit slipping. ,e will talk to the cfo clifford abrahams, next. this is bloomberg. ♪

alix: shares of abn amro are down this morning after an overngs slip and concerns a pro. the cfo clifford abrahams joins us now. there's a few things going on with the bank. one is macro, one is negative rates, and what is the criminal probe. i want to get a sense as to how you look at the cost applications of compliance when it comes to the business. good morning. on cost in particular, we've seen in the numbers today that we've delivered overall good cost control, despite increasing costs for taking best for detecting -- for detecting financial crime. we've already absorbed much of that in our existing run rate cost base of $5 billion. we do expect more costs associated with making sure we

are fully compliant, but we also have running cost programs that will balance those out. so overall, i think costs are well-controlled. alix: on the one hand, you have customer due diligence. then you have compliance. then you have dental unknown fines. is there a tipping point where you say, ok, this is really going to impact our cost-cutting program? clifford: no, i don't think so. you are right to highlight the specific areas, but we are meeting necessary investments in compliance, and we've disclosed those things in the low hundreds of millions. at the same time, we are pursuing ongoing cost reduction on an overall cost basis. in ourbalancing things core business, but putting the necessary resources and for our clients. alix: the issue when you have

any kind of probe is you don't know how long that is going to go on for, and what the ultimate price tag is going to be. can you give us any color into how long you are going to remain in the uncertain place in this investigation? is it years? clifford: you're quite right, it is uncertain. it could be some time. the best way of getting an idea is looking at some of the other ranks around europe, and experience says this can take quite some time. so while the investigation is ongoing, we are doing all we can to ensure we are fully compliant with current and future rules, and managing our business in an effective way. alix: does that also imply i can look at other fines like ing and apply it gingerly to what abn amro could see? clifford: i can't comment on any fine or the amount.

it is uncertain. something whene we know something. but i expect this process to take some time. alix: were you surprised when you were notified? what was your reaction? clifford: well, i think it's clear that in the area of know your client, the banking sector as a whole has more to do. we said over the last year or two that we are working hard on compliance and know your customer. we put in more resources and taken quite meaningful provisions. we've been ramping up activities. we take our gatekeeper role very seriously, and clearly the is something that , so wethe authorities are dealing with those decisions and doing what we can as a bank to ensure we are fully compliant

with current rules. alix: it sounds like no, you weren't surprised? clifford: i'm not going to comment on mike personal emotions, as you'd expect. life in the banking sector right now, and we need to be sure we are fully compliant, and we are obviously fully cooperating with the authorities. alix: is it frustrating? we spent six minutes of the interview, and all i've been able to ask you about is this probe, rather than talking about your balance sheet. do you feel at this kind of compliance, dealing with money laundering, is becoming more important in crisis management as opposed to dealing with the macroenvironment? clifford: i'm not personally frustrated. us, aa challenge for asllenge for the sector, but a banking cfo, we have

responsibilities not just in delivering the bottom but ensuring that we do the right thing for society, and we take our gatekeeper role very seriously. that is part and parcel of being a banking executive. so no frustrations. it is a challenge, and we are working hard at it. alix: when it comes to your bottom line in dealing with the cost side, are there any levers left that you can pull easily to help lift your revenue? revenue, on cost and what we are working hard on on the cost side, ongoing cost program, we announced some time ago a cost program of one billion euros, and we've already delivered 850 million of that, so 150 further to go. oure already talked about ambition to be more cost-effective in i.t. we are making good progress on that.

we'll see the event of those programs across the bottom line over the next year or two. on the revenue side, we have another challenge of low rates in europe, so negative rates in europe, which means it is tough to earn money in our deposit side of the business, and we are working hard to ensure that we are disciplined on the asset side, so with only good margins, opportunity to earn attractive margins in the mortgage market right now in the netherlands. in this quarter, we dedicated our market share of 22%, up strongly from earlier this year, so good opportunities on the asset side, while things are a bit tough on the deposit side. alix: thank you very much for your candor. i appreciate the interview. coming up on this program, u.s. stocks pulling back from record highs. we will discuss one call that a breakout from a range could see the s&p rally 25%.

that's next. this is bloomberg. ♪

reporter: this is "bloomberg ."ybreak google reportedly will be the next big tech company to go into finance. jones, theo dow project will be rolled out next year. apple came out with a credit card this summer. facebook is developing a digital currency. the maker of most of the roads iphones and ipads in taiwan posted quarterly profits that beat estimates. that indicates solid demand for apple's latest device, the iphone 11. they get half of the revenue from apple. shares are up 20% this year. tesla will build an electric car factory that from the birthplace of the internal combustion engine. elon musk says he will be setting up shop in berlin. the facility will make both cars

and batteries. it probably won't be up and running until 2021. that is your bloomberg business flash. alix: thank you so much. u.s. stocks are pulling back from their record rally this morning, but 1 wall st strategist says breakouts from the s&p's current rate could benchmarked when he cut percent higher. the analyst says "breakouts above rising trend can be bearish. " putting me now, steve chiavarone , federated global investment portfolio manager. does history rhyme? steve: our view has been if you could not put up a recession, you had to shut up about the bear market. we do not think a recession is coming, which means we think the bull continues. i think it is important to have humility in the highs. we certainly could see a pullback.

i do fully expect we will march that direction in the next few months. alix: the favorite stat over the left when he five days, we haven't had a pullback. we haven't seen that since 2012. i think the idea is that we are not really going to get that pullback. might not get that. i don't think what we have coming is something major on the horizon, at least not based on what we know today. he said looks like they are in a good place. unless the tariff man comes back anytime soon, i think we've probably got until the end of the year. economic data seems to be improving. overall, it looks as though the trend should be higher. we think we will end the year higher than where we are today. i just can't imagine we don't have a down day. alix: at the top of the hour, my fomo.title was i wonder if you have a sense of the rally we are seeing, managers coming in and wanted to

go along here. happened, wek what were even guilty of this to some degree, when you were coming into the third quarter, there were things to be worried about. there was brexit risk, q3 earnings risk, how the fed was going to deal with cuts and transitioning away from cuts. none of those risks materialized. they were all processed in a positive way, so the markets have moved pretty quickly. a lot of folks said i missed it again, i didn't get in, and now they are saying i don't really see the conditions for a real pullback. let's get in here and now, so i think you see some upward pressure on the markets. alix: do you trust it? steve: i trust the upward move because our view has been consistent. we were here in january talking about 3100. alix: 3300 by mid-2020, right? steve: that's exactly where we still are. if we don't have a recession -- all bull markets end in recession.

we canceled the 2020 recession, and we think markets move higher. alix: steve chiavarone of federated investors will be sticking with me. we will get much more in bloomberg first take. get quickly to the markets here and show you where we are stacking up. this is different than what we seen the last few days. the s&p is lower by about 0.4%, and some ways not surprising, as you seen a huge run-up. you see a move into the bond market. yields lower here by six basis points. european yields move lower as well. is it really a reversal, or just a momentary pause? the one place you are still seeing weakness is italy. yields higher by about two basis points there. happy wednesday. happy freezing winter day, apparently. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i'm alix steel. you are having some weakness in equities across the board. in particular, spanish equities

the under performer in europe, down by almost 2%. i thought they formed a coalition government. shouldn't that be good? in other asset classes, looking at euro-dollar. you had stabilization in industrial production in the region, but also had really low demand for italian bond options, so the currency pretty much going nowhere. qe --y we is up by -- the the kiwi is up by 1%. the central bank now on hold, and that was a surprise to markets. bloomberg first take. we are going to give you the news. you get the trade and analysis of the market. joining me, you've got vincent cignarella, former fx and rates trader and voice of bloomberg audio squawk, carl riccadonna, and still with me, steve chiavarone of federated. i was joking that i would be watching the impeachment hearings and not powell, but seriously, what are traders going to be doing?

vincent: powell is going to be something of a pass, to be honest. everyone is excepting him to reiterate what he said before. we are on a holding pattern for now. we are data-dependent. we will see how things go. essentially, he's going to wait and see how the trade deal develops. one eye on the impeachment, one eye on powell a little bit. a little but of a boring day, to be honest. alix: this is what president trump said yesterday at the economic club of new york. pres. trump: we are going to substantially raise those tariffs. they are going to be raised very substantially. alix: carl, what was your take yesterday? carl: people were really looking to the president to see any new direction or progress in the trade talks, and this was mostly just boilerplate language. if anything come of the takeaway was we are not as close to a big phase i type of agreement where we'd be rolling back tariffs then what a lot of people were anticipating based on leaks to andpress from both the u.s.

chinese negotiators. i think that is why you have a little bit of a reassessment of how far along the path to redemption we actually are. to me, it's not a real surprise. the whole point of tariffs from the president's perspective were to force the chinese to the table and puts them across a deal. we know in general with trump, the closer he gets to a deal, the more he ramps up the pressure. he's trying to push it right over that finish line. so of course he's going to say that. he thinks he's got them close, and he saying, look, either make this deal or i am going to tariff you to 1000%. that's not exaggeration. that's what he says. does, butt is what he in the recent past, it backfired with china. china has pushed back very hard. i was surprised the market took this as well did because a copy by surprise. what also copy by surprise that the market didn't react to, the

white house sends out larry, the big cheerleader. he was out there yesterday and said, if this doesn't go down, tariffs aren't coming off until the whole deal is done. that was new, and the market did not react, which was surprising. it was also kind of negative for kudlow to said that. that is the navarro side of trade, not the larry kudlow side. carl: i think phase i is a lot further into the future than what had potentially been proffered as a skilled rollback of tariffs and whatnot. it doesn't seem like that is the case. i agree entirely come up when larry kudlow is being pessimistic, that kind of tells you where things stand. alix: to that point, we are seeing -- is this just proves you have to chase this return into year end if you get that negative headline that is new, and you don't have markets doing anything? it seems to me it is a buying no matter what kind of scenario. carl: i don't think the market requires all of the problems to

be solved and the trade deal to be inked. i think you really just need to not have an increase in those tariffs. if it is a negotiating play, that's fine. one thing that does give me a little pause is we had a record high. it seems like every time the market takes a record high comedy tariffs come back on. passed the second derivative on the trade tensions where it is probably going to get less bad from here on out, but trump and xi have gotten close and broken up a couple of times. you've got to watch. alix: and animal spirits are alive and well because alibaba just filed a listing application with the hong kong stock exchange for a secondary listing for its ipo. basically, hong kong, which is a complete mess, you have people staying home, bankers not going to meetings, and then you have alibaba listing their, it feels like what saudi aramco is saying. our repeated route -- are we petering out? vincent: it is interesting.

we will talk about that later with saudi aramco. the hong kong dollar is really interesting. i read about this two days ago and was shocked because our friend brought it up to me again this morning. hong kong forwards on monday were as high as they were in the 1997-1998 asian contagion, and they've gone up another 50% in the last two days. that is the real pressure. you talk about the haven of where to go, people are looking to buy forward dollar hong kong. you can't speculate because it is pegged to the dollar, but that is where they are trying to hedge in case something blows up. it is interesting that alibaba is trying to list in hong kong just as the fuses burning really close. absolutelykong is related to trade. i know they seem as though they are separate issues, but if china overreacts in hong kong, it makes a deal very difficult. so i think you have to keep your eye on hong kong. aren't we waiting for

legislation or something to come by in congress to sort of deal with hong kong, talking about putting in the trade? steve: yes, but who cares? i hate to say it. that would pull them away from negotiations. carl: but at the end of the day, they are dealing with trump. as long as something so egregious doesn't happen, he's going to want to get a trade deal done. the question becomes, do they do something so bad that they go nuclear? i don't think so. but if you are presidency and youare -- president xi and are dictator for life, you might say i don't want any kind of challenge to my power and overreact. i hope he doesn't. so far it is simmering, not boiling, but that is something to watch. vincent: for xi, it is a timing issue. within the next year, he will move that financial center from hong kong to shanghai. that is the whole idea of loosening rig elation, to bring the business there. he brought lighthizer and mnuchin there during their

negotiating session and said, here's the banking center of china. will hong kong give them enough time to do that? alix: and alibaba apparently disagrees, putting their listing in hong kong. i was reading an interesting piece in "the financial times" that talked about hong kong. if it happens there, it can happen anywhere. we can talk about bolivia, chile, turkey, all of those events. but if it happens in hong kong, that is a real game changer. carl: i don't know if i would necessarily agree with that. certainly there has been constant chasing of the hong kong there's -- of the hong kongers with mainland china since the 1990's, and as the economies are growing, there's always reason for more stress. especially when you start to see that growth rate slow down, as we are seeing in china. this is a big problem. china is poised to have the

slowest growth in 30 years of good record-keeping. any times you have slower economic growth, you start to have those types of strains. you see it in argentina, brazil, chile, and lots of places around the world. alix: i haven't talked to you about powell. this is what president trump said yesterday on the get of rates. really cracked me up. take a listen. pres. trump: now, many are actually getting paid and they pay off their loan, known as negative interest. who ever heard of such a thing? give me some of that. [laughter] pres. trump: give me some of that money. i want some of that money. our federal reserve doesn't let us do it. [applause] pres. trump: thank you. thank you. the smart people are clapping. alix: a slow roll clap. [laughter] it's no surprise the self-proclaimed king of debt would like negative interest rates. i don't know that he's really

thought it through in a broader context, but i get this question from clients time and time again. how close is the u.s. to a european type scenario if they get native interest rates? i think there is a very high hurdle for us to cross to get there. first of all, in terms of central bank determined interest rates, the fed has made it very clear, a number of fed speakers on a number of occasions, that what is happening in europe is a mistake. it taxes the banking sector and you don't have a healthy economy if the banking sector is constrained. not feed effectively into the economy from central bank rates. traderince is a better than myself, if we want to model treasury yields, bb we will get growth in inflation. until that is adding up to some thing less than zero, basically you shouldn't be seeing negative

interest rates in the u.s. certainly, the final factor is we have much more appetite to use the fiscal lever, whether it is tax cuts or's fiscal spending, compared to our european peers. if rates are low enough, congress and the administration will borrow more. steve: i've always been a big believer in long-term demographics as a determinant of growth. europe, japan and china all have negative population growth, and they are not the center of innovation that the united states is. that's why we are in a trade war. if china had the innovation, they wouldn't be taking hours. the united states has positive population growth, slower in the past, but positive population growth. we are having one of the biggest pickups in productivity growth since the 1990's. that means our economy is poised to grow. we should not have negative interest rates. and by the way, they are on abomination anyway. alix: there you go. into powell today, not that we specked him to slow -- not that

we expect them to slow roll the audience, what do we think? vincent: i think he's going to speak in a very positive way about the strength of the economy, the strength of the job u.s. is in that the a really positive place. when you look at that is an institutional investor, as we would do in the fx and interest rates market, where do you put your money? the best place to be is in the united states. it was a huge deal that abbvie put out yesterday. a lot of supply hit the market, and it's come all the way back. alix: 190 basis points over 30 years. vincent: in the market took it all in. alix: quickly, steve, what is your favorite trade now? if you look at where we position into cyclicals and value? steve: one of the things you've seen come of the fed is essentially engaging in reverse operation twists. they walked away from the 10 year. they did a good job.

i think small-cap value is starting to look really interesting. you've got the banks, you got a steepening yield curve. as a bit of a value steepening there. alix: awesome stuff. really enjoyed the conversation. tune in later. we are going to have an exclusive interview with mary daly, san francisco fed president, at 2:30 p.m. eastern time in new york. a reminder, all the charts we show you can find on gtv under terminal. you can browse them, save the charts. gtv . now an update on headlines outside the business world. sebastian salek is here with first word news. sebastian: the impeachment inquiry as president trump goes public today in front of the house intelligence committee. democrats and republicans will make vastly different arguments. , kratz say the -- democrats say the president pressured ukraine to investigate a political rival. republicans say it is an attempt to take down a president who did nothing wrong.

a warning from hong kong officials and chinese state media. they both say there will be consequent is if violence continues. traffic is disrupted across the city for the third time today, and for the first time, the government closed schools. according to the international energy agency, the world is on track for further emissions increases through 2030. the iea says the solution is for governments to take radical action. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm sebastian salek. this is bloomberg. so much.nk you coming up, unicredit lays out the condition before anymore mergers and buying can happen. if you have a bloomberg terminal, check out tv . you can watch us online, click on the charts and graphics, interact with us directly. check out anything you may have missed. this is bloomberg. ♪

sebastian: this is "bloomberg daybreak." it's all over between nike and amazon. the athletic brand will quit selling sneakers and clothing directly on amazon's website. the announcement comes after the hiring of former chief executive john donahoe as its next ceo. donahoe as its next ceo. that signals the company is going even more aggressively after e-commerce sales. as hong kong protests are causing more problems for cathay pacific, they said seven half results will be significant lee lower than in the first. inbound traffic to hong kong fell 35% last month. the christie's auction in new sold -- itden hippo

was among the corgi are items sold during the -- among the sold.er auction that alix: i don't get it. doesn't heat up? does it move? lots of questions with the golden hippo. we turn now to wall street beat. up,t up, m&a musts -- first unicredit m&a musts. then, schwarzman's six cents. six cents --s schwarzman's sixth sense. alibaba's hong kong listing. joining us is sonali basak. i love this part from unicredit's ceo. i am going to play a quick soundbite about m&a and what he needs to see to get on board.

>> today, with the share price of banks depressed, it is very difficult to do. you need to ensure capital when you consolidate. for us at unicredit, we said recently that we prefer buying back our shares rather than doing larger cross-border transactions. so what this means is probably for the bank shares to go up, and then we might look at it. alix: what was your take away from that conversation? sonali: it is a poignant conversation to have with him because unicredit is one of the banks with think about having potentially merged with hummers bank. there were talk about -- with commerzbank. there were talks about potentially merging with softbank. that said, it is easier said than done. people have been waiting for m&a in europe for a long time. it is really hard to merge these banks. it is nice that he gave a little criteria. alix: higher share prices, and you got to be able to fire

people. sonali: that's true. you have to have a really strong stomach here because this would require a lot of job cuts. that's what kept deutsche bank and commerzbank from merging in the first place. alix: steve schwarzman spoke to david rubenstein. that will be airing on later today. here's what he talked about in terms of taking the firm public. >> in 2007, you decide, maybe you should take the firm public. it is a private company. why take the firm public? >> i took it public for a lot of different reasons. i had a sixth sense that something terrible was going to happen in the environment. money was so available, money was cheap. everybody was doing things. prices were crazy. i just had a sense this was going to come to a bad ending, and we should have a lot of capital to make sure we were bombproof. alix: some serious spidey sense. [laughter] sonali: what's funny about this, when you look back at the stock

price of blackstone, it was pretty laggard at the beginning, really 320 14, 2015. then it started to take off, and plateaued again. the most instant -- the most billions todded his net worth. a lot of private equity firms are cashing out not just for going public, but selling major stakes which are funding their growth, but also adding some liquidity provisions for their own founders. alix: is blackstone still private equity? sonali: it is an alternative asset manager. that is the official term. 2014, 2015 is when they really started pushing into the estate,ucture, real credit funds and whatnot. there are questions about how much private equity is beat. alix:the news finally broke that is going to list its secondary

ipo in hong kong. i'm surprised they are going into hong kong. sonali: this is something they wanted to for a while. anything can happen until the ipo actually happens. we saw some problems with wework and its own ipo earlier in the year. but they expect something by the end of this month, so it is coming really fast. it is a big listing. they may raise more than $11 billion, according to our reporting. so no small feat. alix: how open is the capital market right now, based on your sources in the acm world? sonali: it's funny. yes, there's turmoil, but the banks that have committed to it, they stick with it. they know that it's a long-term bet. they want to make this work, and people do want diversification. people are willing to take on risk in this part of the cycle. they are just not willing to take on risks that are big and scary like wework.

but with everything else, there is some demand still for some risk at the right price. remember, you look at aramco, and people are not living that one point $7 trillion valuation. so if you can give it to people at a price they can stomach and see some growth, you can do ok. alix: good insight. thank you so much. in today's women of wall street, where we look at women moving and shaping the world of finance, we broadened it out for diversity in the world of business. facebook is taking a lot of heat recently, it turns out there are internal critics as well. there's apparently an anonymous memo charging that facebook still has a problem with racial bias. the memo is said to be from 12 former and current facebook employees. "on the inside, we are sad, angry, oppressed, depressed, and treated every day through macro and micro aggressions as if we do not belong here."

facebook apologized and said the company is working to do better. crude prices wired to the market. if you are jumping into your car, tune into bloomberg radio, heard across the u.s. on sirius xm channel 119 and on the bloomberg business at. this is bloomberg. ♪

alix: time now for traders take. joining me is vincent cignarella, voice of the bloomberg audio squawk. 10 year. what are you looking at? vincent: i'm looking at the 10 year with respect to oil prices. quick shout out to julian lee, the oil strategist, who did a great story about the saudi ipo -- the saudi aramco ipo. the saudis are doing a lot of work to keep the oil price poignant. they are going to have to take up the slack, cut output to keep the price going, not just in the ipo date, which is december 5,

but going forward for future listings funding for this trade. that should keep a floor under the oil price. if it doesn't come of the saudis have a problem. someone would expect that the oil price will stay somewhat bullion. ,hey correlate rather nicely sitting on a nice support level at this point. i would expect going forward, we see higher oil prices, higher 10 year yields, better growth going forward. alix: higher breakevens. i like it. vincent cignarella, bloomberg squa every day. this is bloomberg. ♪

♪ alix: welcome to "bloomberg

daybreak" on this wednesday, november 13th. i'm alix steel. here's everything you need to know this morning. protesters in hong kong paralyze the city for a third day in a row. >> there is a bit of a new dimension here today. we saw schools suspended for the first time during these protests. they will not be in session tomorrow, and some universities are canceling classes for the months or even the semester. alix: china is warning there will be consequent as if the violence does not stop. and global oil demand will level off in the next decade. the iea predicts that electric vehicles and more efficient cars will put an end to the expansion that's dominated the last century. >> if the governments take efficientger clean, technologies, push the muck sure ungur -- push them much stronger, we may see it come earlier. but at the same time, if the

policy of the government's going the other direction, we may see peaks come later. pres. trump: the deranged, delusional, destructive, and hyper-partisan impeachment witchhunt. here we go again. alix: america will hear from the witnesses against president trump. kevin: the white house is preparing for political battle as the impeachment inquiry moves into its public phase. alix: the household its first public impeachment hearing today. pres. trump: eight increases in total, which were in my opinion, far too fast in increase in farcical -- and far too slow a decrease. alix: the president makes it clear where he stands on the fed. >> today we will see what the fed thinks about the economy from his perspective. alix: in a few hours, we hear from the fed chair jay powell, set to testify on capitol hill. in the markets, you can really see what happened yesterday. you had risk on rally, trump speech, and we are continuing

that into powell's speech. s&p's off about 2.5%. you're seeing some buying coming into the treasury market. yields down in the u.s. by about five basis points. joining me for the hour, michael mckee, bloomberg international economics and policy correspondent. we can be serious and talk about powell or really get into it, but can we just talk about how cold it is? have you even left your house? it is really cold. michael: it is really cold. i know alix went outside and said, we'll prices are going up. alix: i thought more about natural gas prices, but that's fair. we are going to hang on every word here? big events got two today in washington, the impeachment hearings starting and powell speaking. for the markets, it is a short-term move. he is either going to signal that rates go higher or rates go lower. you've got to position yourself,

whereas impeachment is going to play out over a long period of time, and there's no indication for the markets yet. right now it is a distraction as opposed to something you've got to sit in front of your desk and watch. alix: we were just talking about president trump taking the stage at the economic club of new york yesterday, and surprise, he talked about trade. pres. trump: we don't make a deal, we are going to substantially raise those tariffs. they're going to be raised very substantially. ,lix: joining us in new york michelle meyer, bank of america merrill lynch head of u.s. kim forrest,d bokeh capital partners founder. are you going to boxing powell -- going to be watching powell? michelle: of course. i don't think he's going to be much different from what he said in the last press conference. he will probably highlight that he thinks the fed has brought policy to an appropriate level, that monetary policy by some

measures is actually accommodative, that they would need to see this material reassessment of the outlook before they adjust policies lower. i think it is going to be a very similar narrative. what i am looking for and hoping for is maybe a little bit more perspective on what those triggers might be. what does material reassessment of the outlook mean? what would worried them about the economic data or the event that would prompt them to start cutting again. if they do cut, what do they think that will look like? what is the speed of those adjustments? how concerned about the balance of the risk? what ishedea they think they are at the appropriate level now? what comes next? michael: i have the feeling it is going to be the old supreme court pornography definition. we can't tell you what it is. alix: but you will note it is serious when you actually see

it. how would you be positioned here into out of this, especially when we've already seen this factor rotation into value encyclical -- value and cyclicals? kim: i think you should mind those areas a little bit more, and i think it's because they are on sale, or have been for years. sale, or have been for years. you have to be very careful about what you're buying. you have to be sure that even if you are looking in the value sector, whatever actual companies that you buy have room for growth and have identifiable catalysts for growth. i think that is imperative for people who want to make money in any market, but especially in this market. that's where i'd go shopping. michael: it seems the idea we are now going to be able to extend the rally because we are going to extend the expansion, but there doesn't seem to be a lot of conviction that that is going to happen. we are all back to

going to die any minute now. kim: don't rule that out. we are always kind of looking for that next recession. that's just where we are right now. it's because this time, it really is different. we've had this expansion now for a very long time. but everything is different. the fed is different. eus is the first time the has gone through a very large banking crisis. everybody is finding their way, and i don't know that going back of when fedold days interest rates were up in the 45% is in the books for any of the perceivable future, and i think that is kind of what president trump is indicating, although we will just say in a n inelegant manner. but the models have to be really looked at and evaluated for the world that we work and with respect to interest rates. michael: if anybody is going to

know when we hit recession, it is going to be michelle. alix: of course. [laughter] michael: i will put it in my calendar. michelle: i think, to kim's point, there is an awareness that we are in at least later stages of the business cycle. i think there is this concern that at any given point, you could have a shot big enough that we get this recession. what will that recession look like? how will these markets react? how will monetary policy react? there are lingering uncertainties and concern that continue to shake markets. but nonetheless, in real time i think you have to monitor the data. you have to monitor the events. we always do this idea of risk management. i think what we've noticed in the past, even a few weeks, that big tail risk on the left, that big downside risk has diminished. that probably was enough to

support markets in the last few weeks. alix: fair point. goldman sachs saying, "while fed officials and economists mostly focused on downsides to growth, easing financial conditions finds surprise to the upside in 2020." if you like market does a bits are trying to figure out, is this a fomo -- market participants are trying to figure out, is this a fomo rally, or are conditions good enough to continue this? how do you look at this? kim: i kind of drift towards the value sector. growth at a reasonable price is what i really am. you know, kind of in the leftover department, maybe. but anyhow, here's the issue. no one really knows when the recession is going to hit. you're right that this might be a year-end rally. but the thing is, guidance from

companies, and they usually go out a good six months whenever they are talking to investors, we've just come through earnings season, it just doesn't look that bad as we thought at the beginning of the year. as an investor, you have to go with that. however, what you really should be doing when you are to your portfolio is looking three to five years out. no one can tell what the economy is going to look three to five years out exactly, but we can make an assumption that sometime in their, we are going to see growth. i think that is good enough for the modeling that you have to do when you're looking at stocks. you don't know what is going to happen down to two decimal places. you just don't. michael: we have a question from if you asking about the fed's activities recently, putting more money into the system, adding liquidity. the talk in the markets was that the fed had choked off liquidity at the end of last year.

that moves the comic data down. how much do you put into that, and how much of a turnaround are we seeing now? do we see easier financial conditions leading to a boost in growth, or just maintaining the growth that we have? michelle: that is a good question. that is something that is overlooked, that the fed has made pretty significant adjustment into their balance sheet policy. this time last year, it was still quantitative tightening. until it wasn't. until there was a bit more awareness that maybe there was some liquidity to chase, and the fed has to think about the .ptimal level of reserves about a month ago, we had the disruptions into the market, and now the balance sheet effectively has to grow. they are communicating that they could be moving from this stopgap type of balance you to adjustment to a more organic balance sheet growth that will keep up. the question is, what does that do to liquidity and margins?

it has contributed to a little bit easier financial conditions. when you see that in a can, easier financial conditions, it is important for economic growth. think we see not to some extent this year. jay powell alluded to that in the press conference. sure he will say the same thing today, which is that lower interest rates supported the interest-rate sensitive sector of the economy, which is housing. we had residential investment add to gdp growth in the first quarter -- in the third quarter, the first time in six quarters. alix: when you look at the broader equity landscape, i have msciersus, ci -- versus world index. obviously the s&p has outperformed. do you play that value for europe and the value in emerging markets, or do you have to stay in the u.s.? kim: i think you have to stay in the u.s. at this point. if we get some sort of reasonable trade deal, and again, like at the beginning of

this conversation, somebody said that the supreme court's view of pornography, you know it when you see it, i guess it is the same thing with trade. we will know what reasonable is when we see it. i think that should be the impetus to get back into the emerging markets, and even europe. i think those two areas in particular have been deeply affected by the trade war the u.s. and china, which have been affected, but less so than those two areas. timelineve a very long , maybe you can look at those areas now. but if you want to see more upward movement sooner in your investments, i would hold off until that trade deal actually materializes. michael: she said if. that is the key word for everybody these days. of bank oflle meyer america merrill lynch, kim forrest of bokeh capital --tners bow sticking with us partners bow sticking with us.

coming up, trump warns of a stockmarket retreat should there be a democratic win in 2020. we discuss what is at stake in the white house race, next. this is bloomberg. ♪

pres. trump: i think the biggest risk is the election. i will be honest. i believe some of these people mean what they say. the truth is, we have no choice. the people we are running against are crazy. [laughter] pres. trump: they are crazy. alix: then he got a genuine laugh. that was president trump warning that a democratic win in 2020 would endanger economics. they believe banks and their executives were not sufficiently

.enalized for the 2008 crisis ,till with me, michelle meyer bank of america merrill lynch, and kim forrest, bokeh capital partners. do you agree wall street is really a huge risk for 2020? i think wehelle: have to think carefully about this election. we have pretty stark views on both sides. we are not really talking about one establishment candidate versus another. quite the contrary. i think they're likely could be disruptions to wall street, to tech, to the pharmaceutical industry. athink in general, if you are company right now, you have to consider, what are these different candidates vying for? we are still talking about the election. the candidates are still running. i think it is hard to translate

what they are saying on the campaign trail to necessarily what they will be able to implement in terms of policy, especially since you always have to consider the composition of congress. you have to take it through all of those different factors, i think. michael: you mentioned trade as an unknown that affects your investments going forward. we've got the impeachment hearings, and of course, the fed overlays everything. but you did mention the election. i wonder when or if that gets into the markets. windows election political risk start to influence, if it does, what you invest in? is an excellent question. i generally don't react to elections because, well, this is sad to say, but the president doesn't necessarily have direct impact on most of the firms i am looking at because they sell their products worldwide. even the smallest companies today find markets outside the

u.s., so we always have to remember that. generally tolation affect the fortunes of our companies. it takes a long while to get that through congress. so i'm always trying not to react. that being said, this time it may be different because it does democrats are very anti-largeg on a business platform, so i think anybody in their sites has to at least understand that they are going to be called up a lot in hearings, if nothing else. it is not going to make the companies look very good. i think investors, especially in tech, have to be aware of this. michael: i wanted to specifically ask about financials because the candidates talking about wall point, wouldix's

seem to want to do something about it. donald trump comest to ease financial conditions, and didn't seem to do much about it. right. that's probably because of the economy, to be honest. i do think that the financial industry will have a target on its back. it wasn't punished adequately, and some people's minds, for its role. quite honestly, all of the actions of the fed this last decade has been there to support the banking industry. but here's the thing, banks are the actual bedrock of capitalism because that's how the money flows from one institution to another. so we had to have a viable banking system. i think, given the new rules they put in place about reserves, all of those kind of safety guards, i think that's

actually worked, and the banks are not necessarily benefiting terribly -- or tremendously from the fed anymore like they had been at the beginning of these programs because it was designed to help the banks not fail. but they still can get punished just for being banks. pivot when it comes to tech, if you come inside the bloomberg, you can take a look at what you're looking at in terms of earnings, the blue line versus the white line, and terms of how they are performing. you could argue you are super expensive, and then you have the regulatory risk. when i hear things like google and health care, and google and facebook starting up their own bank or credit card, all of that, states getting in there to sue these tech companies, what you buy? kim: i kind of like the tech that feeds tech. companies like the semiconductors, companies that

feed into the semiconductor area. even an old stalwart like microsoft, who i think kind of escapes this right now because their focus is on business. i think their growth avenue is compelling. what they are doing is taking existing customers and allowing them to move to the cloud via the azure product, and i think it is very compelling for companies that have built custom software that they run their business on everyday. it was built on microsoft, it is an easy sell to say, use our version of the cloud to move over there. so i think microsoft has a long runway and looks really good at might -- well, who knows -- but be able to get out of the light of government intervention. alix: because they've already done that. been there, done that. [laughter] michael: we've also got the

banks relatively healthy and willing to lend, but there doesn't seem to be any demand for loans, and companies have all but stopped investing. does that change in 2020 if we get a phase one deal, or does it change at all in the near-term? michelle: i think it was really interesting about the data last week that was overlooked, it -- id this divergence think you get some really good anecdotes and out of there. it shows that the household sector is borrowing. demand for credit card loans was high. to me, anything that speaks to this confidence shock is trade war. the question is, does that come back? i think it does to some extent. businesses will pick up a bit in terms of investment, but there

might be a limit. the question is, how much more credit is necessarily needed in this environment? alix: it is the if again. michelle meyer of bank of america merrill lynch, kim forrest of bokeh capital partners both staying with us. elon musk invading europe, saying he is building a new factory in berlin. this is bloomberg. ♪ . ♪

sebastian: this is "bloomberg daybreak." the world's iphones and ipads, taiwan's hon hai, posted earnings that beat estimates. revenuegets half of its from apple, and shares are up 27% this year. the iea predicts global oil demand will hit a plateau around 2030. the iea says it will end and expansion in oil demand that has

dominated the last century. that is your bloomberg business flash. alix: thanks so much. speaking of, elon musk strikes fear into german automakers by building his next plant in berlin. michael: yeah, maybe. the biggest auto plant in the u.s. is a bmw plant. sue if they move -- so with the move is to build a plant where your customers are, they are going to be looking for electric vehicles in germany as well. it will probably push them to move faster on their own ev develop. alix: were you build them in china and have them picking up in germany, but nonetheless. coming up, the latest read on inflation. we take a look at tariff pressures and if they are starting to show up in consumer goods. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. 30 seconds away from the latest read on inflation in the u.s.. a little bit of a selloff risk conversion.

s&p futures down .3%. in other asset classes, that is where it could get interesting. the euro-dollar flat despite the fact that you had stable industrial production. you are seeing a move into bonds. yields moving lower. goldman sachs skeptical we will get above two point 2% with any tariff rollback. the data dropping right now. cpi, if you back out food and energy, in line with estimates on a month by month basis, .2%. on a year on year basis, 2.3%. a touch lighter. on a month on month basis, it is up by .4% if you keep everything in. average weekly earnings coming in 1%. hourly earnings coming in over 1%. andl with us are jim course michelle myers. mckee, anything that stands out to you?

michael: the headline is stronger than anticipated but it looks like that is energy prices. that is something the fit is going to look past. housing, remarkably restrained at this point. in-linen the month, with average but lower than we have seen in recent months. apparel costs down 1.8%. that has been an ongoing theme as we get cheaper stuff from overseas and tariffs have not hit those. if you want to buy additional clothes or christmas gifts there is an opportunity. does it windalix: up hitting it? this was a thought softer report on balance. core cpi came in at .2%. -- at 2.2%. on rounded, it was 1.57%.

components,at the the shelter components were restrained, particular with rent only up .1%, the smallest increase since 2011. a very large drop in hotel and hotel prices. lodging prices were down sharply. that could be noise, that could be related to some of the distortions and whether in california. thisyou take a step back is a pretty soft report for inflation on balance. wehael: we take it apart and look at each individual category. the story seems to be we are about status quo. it is not rising, it is not following. alix: if that is the case, is that a green light to buy retail and by the consumer? kim: i would say so. i think it gives that that no room for raising. clearly we are at full employment.

inflation is not hot, so why raise? it does not give room to drop, either. i think the lead into the segment was interesting. the price of clothing continues to fall. that is a driver for people to go shopping, where they see the lovely low prices and might buy that new jacket or new sweater or whatever. michael: if we are going to see low prices, are we going to see any difference in consumer behavior going forward or is it about the same at this point? kim: i think it will be about the same. what would really drive consumers is a change in what we are supposed to wear. we have been stuck in this area with longerans look tunic things over top.

i can feel people's eyes glaze over, but it is important. you do not have to go shopping of things do not change. the retailers have been trying to change that for a while and it has not worked yet. michael: i will toss this to you. alix: it is literally describing my outfit i wore today. retail sales coming out friday. what is going to be the story? michelle: we track our own internal data to get a good indication of what retail sales might look like and today we published our estimates. it looks soft on balance. retail sales only up .1%. that is three months in a row where we've been seeing softer data for the consumer. theuggests that the risk is data is catching up with the signals we have seen from our own internal data. it is not any faster for the consumer. the consumer still providing enough bet to the weakness from

business investment, but there could be moderation. what really stood out to me from our data is the split between low and high income in consumers. we are seeing faster growth in spending amongst the lowest income part of the population and high income consumers you see a notable slowdown. that speaks to what you're seeing in the data, or income growth has been picking up and they are spending out of that. the higher end consumer is saving more because they are facing uncertainty and looking to be more cautionary. michael: is that reflected in what we are seeing in equities? do we seeing the discounters better than nordstrom's and the higher end stores? kim: absolutely. online and comparison shopping before they pull the trigger. you can find deals.

i think one of the hotter areas of retail seems to be the resale vendors. that whole sector is growing for all incomes and it is an area to watch. it can compete against the priced retailers. alix: clearly you and i need to go shopping. if we wrap all of this together, i was struck by a recent paper that talked about how the neutral rate on a global level is -1%. that encapsulates the lack of inflation, the trend growth consuming the slowdown. what you think about that? michelle: i think that makes a lot of sense. you are looking in real terms. we know nominally interest rates have come down on the structural basis across the globe, and then if you account for inflation, it is quite natural you would touch some measures of this trend in negative territory.

is that permanent? not necessarily. it could change. for the time being, it seems like the dynamics driving the economy are one where rates are structurally lower. michael: if rates are going to stay where they are, have we seen the benefit or do we get an additional burst of spending either in business or residential or consumer, or is this what we've got? the fed is done? michelle: that raises an important point. that is when you think about the impact of financial conditions. this year the fed has managed core five additional conditions because they have had low interest rates. is almost 150e basis points from the peak. that is a substantial easing of conditions that happened quickly at the beginning of the year,

even before the fed started cutting, you saw the market move. going forward, there is a higher hurdle for the fed to do more, to expend lower rates even more and get markets priced in even more accommodation. there is still hangover monetary policy. financial conditions will continue to bleed into the economy. to get that additional burst we had this year, it is a harder ask. alix: kim, you mentioned how you like certain areas of tech like microsoft. what will be a top pick for a fed that cannot do anything either way? what is another good play? kim: looking at discretionary retail is still attractive at this point. this is a longer-term story. how do people buy online? it is not like they buy in store. whoever can get to be a great

merchandiser, and by that i meet when we going by something .nline we add to our cart that element of surprise. that thing we did not know we really needed. that is what i am looking for. discretionary retail is undergoing a change independent of the economy. things.w we want to buy there are going to be winners and losers. that is where i would mine for gold. alix: enjoyed the conversation. forrest,myers and kim thank you. later today we will have a live interview with mary daly at 2:30 p.m. in new york. an update ono get what is making headlines outside the business world. sebastian: the houses impeachment inquiry in president trump goes public today. will answers

questions from the house intelligence committee. democrats and republicans will make vastly different arguments. republicans say the investigation is just an attempt to take out a president who did nothing wrong. street bond traders will be watching jerome powell and the impeachment hearings today. powell's appearance before congress probably has more potential to move markets. investors are looking for confirmation powell plans to pause interest rate cuts next month. officials from chinese state media say there'll be consequences if hong kong state violence continues. protesters disrupted traffic across the city and for the first time the government is closing public schools. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. salek and this is bloomberg. alix: cpi if you back out food and energy coming into .3%.

basis --h by month pretty soft, inflation bumping along on the 2% level. coming up, the iea stays bullets on u.s. shale and a fracking pioneer is skeptical. remember, bloomberg users to interact with the charts we used throughout the show. gtv on your terminal. this is bloomberg. ♪

sebastian: this is "bloomberg daybreak." it is all over between nike and amazon. the brand will quit selling sneakers and clothing directly on amazon's website.

nike's announcement comes after the hiring of former ebay chief executive officer as its next ceo. the company is going even more aggressively after e-commerce sales. hong kong protests are causing more problems for cathay pacific. cathay said second-half results will be second -- significantly lower than the first. passenger traffic to hong kong fell last month. apple fans -- apple plans to introduce a macbook rope with a larger screen and keyboard. it is the first major update since the macbook pro line was updated three years ago. expected to be about the same as the current model at $2400. alix: time for bottom line. we will take a look at companies worth watching. today we focus on pioneer natural resources. in its latest outlook report, says global oil demand will hit a plateau in just over a decade. here to help us break it down

from the u.s. shale perspective is gotcha field. it has been a long time. good to see you back. scott: always great to be back. me fromo thing struck the iea report. the other is they are quite optimistic on u.s. shale over the last decade. what you see? there are several reports. i think 2030 is a little bit early. there are reports between 2030 and 2050. i think we will hit sometime in that time. fossil fuels will still be 70% of the energy source in the world by 2040, down from 81% to 78%. still almost one billion people in africa need electricity. a lot of it can come from natural gas. i think they're way too optimistic on u.s. oil shale. the numbers have been driven

down significantly. they are saying it will supply 85% of the world's growth and oil between now and 2030. i think it will be about 30% or 35%. alix: why? kim: we are all adopt -- scott: we are all adopting a new model for the investor. the next five years typical oil producers will be spending 85% of their cash flow on drilling wells. thewill go back to investors in regards to dividends and stock buybacks and balance sheet for some companies. we typically spend 105% of every dollar back into the ground in the last 20 years. going to be 80% for that number. that is the big change. secondly we have lower prices. there's been a collapse of protein and butane over the last six to 12 months. lower cash flows for companies.

thirdly, too many people are running out of inventory and ierlling tear two and t three. michael: it raises two questions. what does it do for prices? that is what the average person is going to be asked. if we're going to be drilling for less oil, does that mean prices go higher? stable point? scott: there are three or four major countries bringing all of the projects. norway, guiana, brazil, all bringing major projects in late 2019, early 2020. beyond that, there are few projects. if u.s. shale is not the swing producer, it will probably mean higher oil prices. 2015,l: 2016 and investment in shale drilling onlapsed and what followed was a manufacturing recession for the united states. if we are seeing investment drop

, that is not collected to trade wars and things like that, what does that mean for corporate investment going forward? is it going to be permanently lower? scott: when i say increase, maybe a $10 increase good we export all of our crude around the world, both to asia and europe. we run our business off of brent. wti is five dollars a barrel lower. brent may move up $10. it may move up to $70.75. i do not think it will shock the world are the economic system unless it moves $80 to $100. alix: to mike's point, a parent child relationship is when you are drilling wells close to each other and they interfere and you do not recover as much oil. damage done toe

the oil wells is permanent or do you feel like that can be corrected, which does going to anger-term capex and longer-term outlook question. scott: it can be corrected. the child wells are still economic to drill, it's just that people have to do a better job with the parent well. people have to do great forecasting with what that model will do. -- do you gojects has been successful in the eagle 10% recovery out of the same horizontal well. pioneer and chevron will attempt that in the permian basin. alix: what keeps you comfortable with oil in this environment? scott: i was able to give advice to my son. he probably did one of the few deals that were very successful. he asked for my advice i did not know the company. i said has to be contiguous

acreage and it has to improve your balance sheet. it met both of those and that is why the stock has come back. not too many of those companies can do those deals. alix: can you? pioneer has over 10,000 drilling locations. we do not need to do a deal for a long time. we have a long inventory that will last decades. michael: i am curious to go back to something you heard -- something you said earlier about no projects between 2021 and 2025. how come? if we are not going to peak until 2030, you would think the oil majors would be looking for more stuff. scott: it is interesting what happened. brazil is an example. a move and wanted to shut down u.s. oil shale and shut down exploration and shut down canada. he was successful in shutting down canada. he was successful in shutting down u.s. and world oil

exploration, and he was successful about two years in shutting down u.s. shale. u.s. shale came roaring back. is to do things to make it economical at $50 to $60 in this country. the rest of the world has not, and that is why there is no investment in those type of to 2025.from 2022 alix: what you think it will take for new and old investors to come into the space? scott: as you know, we've been running these companies off of production growth. if you listen to most of the calls and reports, very few people talk about production growth. it is all about free cash flow yield. we need to get up to 5%, which is the midpoint of the s&p 500. we need to get to double-digit return. only a few companies in my opinion will get to those numbers. the rest of them will have to consolidate.

who does the buying? scott: more consolidation. i have reported that the majors will have to rebuild their inventory and do some buying, but most of us will be at market mergers through consolidation, which has to be pushed by the long investors. they have to push it. i do not think they will be pushed by the ceos of the companies. alix: if occidental has anything to show for it. scott, great to have you. scott sheffield, pioneer at natural resources. nerdyke, welcome to my oil world. michael: always happy to join you on your nerdy oil world. alix: coming up, we will take a look at key support zones and what to watch in technically speaking. if you're jumping in your car, tune into bluebird radio across the u.s. on sirius xm channel 119 and on the bloomberg business app.

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alix: time for technically speaking. what we will set you up with trades for the day. bill maloney, boys of bloomberg equity squat joins us now. to bill all day by typing in sqa on the terminal. bill: skyward down 6% on the premarket. we'll get back some of that on the open today. the key support zone is the april peak, and the bottom of this cap. 95, beforert 94 to that looking at the may high of 91. let's get tolix: canada goose. 21 in new york. even pulled or you live. bill: definitely an appropriate stock for today. up allowed 7% in the premarket. will bet resistance $42, the top of this cap.

if it can break above that, the 200 day moving average has been resistance dating back since april and has been a downtrend since november. first resistance is $42. alix: a crazy tight range. american airlines? bill: american airlines is down 1.5% in premarket. look at the five-year chart. the stock has fallen from 60, it has been in a clear downtrend since september. supportsee long-term dates back to 2016 around 25. 31 and 25 yorkie numbers at american airlines. alix: thanks a lot. bill maloney. ferro,up with jon skyward capital co. cio. this is bloomberg. ♪

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>> coming up, equity markets heading lower. another day passing without a phase one trade deal. president trump keeping an agreement in place, taking another swipe at the federal reserve. chairman powell take center stage in washington, addressing the joint economic committee. 30 minutes until the opening bell. good morning. your is your wednesday morning price action. futures negative nine points on the s&p 500. off the lows of the session. down .25%. driving theersion bid into treasuries. yields down to 1.88 on the u.s. 10 year. euro-dollar around 1.10. let's begin with the big issues. how much oxygen is left in the cyclical rotation? of closed group cyclical moves. >> the location into cyclicals. >> a little bit more to run. >> we